Thursday, July 24, 2014

Limited Trounson Investigation Shows No Evidence of Illegal Conflicts

The California stem cell agency said today that its "severely" limited investigation found no evidence that its former president, Alan Trounson, attempted to influence action on behalf of StemCells, Inc., during June of this year.

Randy Mills, the new president of the agency, said the inquiry involved examination of documents, emails and interviews with staffers of the California Institute of Regenerative Medicine(CIRM), as the agency is formally known. But he noted that the investigation was "severely" constrained because it involved only internal CIRM activities and interviews with Trounson. The agency does not have subpoena power or the ability to scrutinize StemCells, Inc.'s internal records.

Mills said that the inquiry covered a period beginning June 9 when Trounson was offered a position on board of StemCells, Inc., a publicly traded firm based in Newark, Ca. The firm has received $19.4 million from CIRM. Trounson's appointment was announced seven days after he left the agency on June 30. The agency was not notified in advance about Trounson's appointment. Directors of StemCells, Inc., were paid up to $99,000 during 2013.

The investigation also disclosed, Mills said, that StemCells, Inc., in June requested and received special funding and other financial benefits from the agency despite its failure to meet the milestones specified under its contract with CIRM.

Mills said a full report on the investigation would be made available to the public. The inquiry was conducted by an attorney, Margaret Prinzing, with the law firm that is the long-time general counsel to the board, Remcho, Johansen&Purcell of San Leandro, Ca.

A number of board members expressed concern about the negative publicity that resulted from the Trounson appointment. Chairman Jonathan Thomas said the probity of the agency was of "paramount importance."

CIRM Director Michael Friedman, CEO of the City of Hope, said that the situation could have been managed better if Trounson and the company had disclosed to the agency the possible hiring at the time it was first discussed.

Another director Jeff Sheehy, a communications manager with UC San Francisco, admonished recipients of CIRM awards to exercise some discretion in connection with conflicts of interest and to respect the people of California.

Mills said that as a result of the inquiry he was going to go beyond state law dealing with conflicts and revolving door employment. He said he would not accepts gifts or travel from enterprises with financial connections to CIRM even when permitted by state law. Mills also pledged not to accept employment with a CIRM award recipient until at least one year after leaving CIRM, another standard that exceeds state law.

Following today's meeting, the agency issued a press release about Mills' decision. The release did not mention the investigation into the Trounson Affair.

Mills said the standards applied only to himself. He said he did not want to block possible employment of CIRM staffers by CIRM grant recipients in the future.

It was not known when the Trounson investigation report would be available. Here are the slides that Mills used for a variety of purposes at today's meeting. His summary of the investigation is contained within the slides, beginning on slide 6. His signed pledge regarding conflicts is also contained in the slides.


  1. Anonymous12:40 PM

    Could Mills block future employment of CIRM staffers even if he wanted to? There is such a thing as individual rights written into the constitution.

  2. Good question since it would affect an implied or explicit contract with employees. It would have to be lawyered, but the agency could tell employees now that from the current date they would have to agree to restrictions on future employment. However, that could lead to a loss of employees who would start looking immediately elsewhere. Restrictions on future employment do occur in the private sector. But the problem at CIRM is changing the explicit or implicit terms of employment that were already agreed on.

  3. Anonymous1:29 PM

    Well, CIRM could "tell employees" but would it be constitutional and enforceable? This idea has been bandied around quite a bit in your blog but if I were an employee of an organization that made such a pronouncement, I would immediately get the ACLU involved.

    1. Like I said, it would have to be lawyered. But basically it would work something like this, although it could be done more delicately. CIRM sends a memo to employees, all of whom are at will employees, saying that beginning at the first of next month, we are going to change rules concerning revolving door employment. If you do not want to agree to those terms, you are free to leave. I am not sure that is the best way to change the rules. And it would certainly create some vacancies at a time when the agency does not need to lose valuable employes. But the revolving door situation is still there, except for the president. How would you propose dealing with it?

  4. Anonymous3:11 PM

    I would propose starting with evaluating the rules that are in place. Other than you stating these are "minimal" under California law, you have done nothing to enlighten readers as to the nature of the rules. Once you have familiarized yourself with them, you might then address the question of whether they are indeed "minimal" for your readers. Or allow your readers to draw their own conclusions. In terms of reportage in this blog, it is a bit disconcerting to find continual self references and continual omissions of information that does not support your agenda. I assume you know where to find the regulations to which I refer.

  5. The California Stem Cell Report has carried the full text of the rules along with a discussion of revolving door matters involving another high level employee at the agency. Here are the links:
    We should note there is a great deal of difference in these matters between what is legal and what is ethical. .

  6. Anonymous4:42 PM

    The links are to blog posts that discuss pre-employment rules. What you haven't provided is post-employment rules. Which is what is pertinent to most of your discourse. And who is the "we" in "we should note"?

    1. Re comment about links to pre-employment rules, the links include an article with CIRM's advice to its employees concerning what they should do when they seek employment elsewhere. The material is from the agency employee handbook and basically duplicates state law. The law applies to CIRM employees while they are at the agency and after they leave the agency. The section from the handbook also contains a link to a more detailed discussion of the state's revolving door law that was prepared by the state Fair Political Practices Commission, which enforces them.

  7. Anonymous5:01 PM

    It's not clear what anonymous is trying to get at. Dr. Mills in no way suggested making rules for employees concerning their future employment or attempting to block future employment prospects for current employees. He merely, but in a significant way, set a standard for himself--one higher than required by State law.
    As a concern for employees' future employment seems to be the focus of anonymous's comments, I would note that both Dr. Trounson and Stem Cells Inc by their disregard for the public's perception of Trounson's acceptance of a director position so soon after leaving CIRM have greatly damaged current CIRM employees future employment prospects, at least in regards to current CIRM grantees (which includes most major research institutions in California). After seeing the public outrage and damage to Stem Cells Inc's reputation from engaging Trounson, would not a current grantee think twice before hiring a CIRM employee?
    In short, this is on Trounson and SCI, and it reflects selfishness and total lack of concern for current CIRM employees future prospects.

  8. Anonymous8:46 PM

    The idea that hiring a CIRM employee would engender "public outrage" is patently ridiculous. Attempting to eviscerate CIRM by making it impossible to employ people, or retain employees, appears to be the end game.

  9. Anonymous8:33 AM

    Pay attention! Dr. Mills explicitly said that he is applying these constraints to himself only. Other CIRM employees are under the same regulations that Alan was under, and after being steeped in Alan's brew of cronyism and bribery it's unlikely that any of them will be interested in taking a higher road. Besides, all of them make far less than the $500,000 a year that Alan was paid, so I doubt if they want to take a year off before finding another job. ---another anonymous.

    1. Re CIRM staffers, it is much too harsh to say that they are following in Trounson's footsteps. My sense is that these folks have good ethical standards. That is not to say there aren't revolving door issues at the agency. There are. What is needed is solid guidance from the board so that their employees know exactly what is expected legally and ethically. That is a key responsibility of the board and management. State law is inadequate and vague.


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